MOB7120-A52

Ajay Kumar (Summer: Tue, Thu)

Final Paper: Negotiation Guidelines

Guideline #1: For multiparty negotiations, conduct stakeholder analysis (including drawing a stakeholder map) to identify key stakeholders, their interests, and the role are they playing in the negotiation

Evidence We did the Harborco exercise in class involving a six party negotiation between Harborco, Federal Department of Coastal Resources (DCR), State Governor, Unions, Environmental league and Other Ports. Each party had its own specific set of interests, and Harborco required the support of at least 4 out of 5 other parties. This group needed to negotiate on several issues before approving the new ports. The issues included: type of industries, mitigation of environmental damage, preferential hiring for unionized labor, the amount of federal financial assistance to Harborco, and the compensation amount to other ports for the potential economic losses. In this negotiation my role was of the Environment league, therefore the industry type and mitigation of environmental damage were two key issues for me. It was very important for me that the environment in that area be improved rather than being degraded, as well as bringing in hi-tech and clean industries to the area. The only party that shared my interests was DCR, and maybe to some extent the Governor; however both had other interests which superseded their environmental interests. Since my BATNA wasnt that bad, I was open to forming a collation with other ports to make sure that the deal didnt go through. Based on this understanding I plotted the following stakeholder map.
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Ajay Kumar (Summer: Tue, Thu)

High

Supporter

Ally DCR Governor

Degree of interest satisfaction

Medler Other ports

Blocker Union, Harborco

Low Low

Degree of Interdependence

High

Since 4 out of 5 other parties needed to agree in order to pass the vote, most of the stakeholders had high level of interdependence making them fall in either an Ally or Blocker category. Union and Harborco had no interest in environmental issues hence they were considered blockers. It seemed like the other ports were also not interested in environmental issues, but were willing to form a coalition to let the deal not go through. This analysis helped me prepare for the exercise. However I was unable to form a coalition with DCR and governor because of lack of commitment; and eventually ended up forming a coalition with other ports, which was my BATNA. Circumstance(s) This guideline is relevant for multiparty negotiations that focus on multiple issues leading to the complexity of information as well as the dynamic nature of the negotiation.

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Ajay Kumar (Summer: Tue, Thu)

Why guideline would be helpful? This guideline is helpful in preparing for multiparty negotiations, specifically when influencing the process structure for strategic benefits. Limitations Detailed information about all the involved parties and their interests might not always be available. Preparation might be difficult given the complexity of the technical details and how they align with each stakeholders interests. There is no guarantee that the negotiation fill follow a specific path. For example, when we did this exercise in class, I failed to build a successful coalition with the stakeholders who I had identified as allies, instead opting for my BATNA in the end.

Guideline #2: Always try to identify other partys interests before negotiating in order to create value and establish legitimacy.

Evidence This year, our company went from a 4 point rating scale (lets just say A, B, C, D with A being the highest) to a 3 point rating scale (A, B, C) for conducting employee performance reviews. In addition to that, the HR department provided guidelines about the percentage distribution of these ratings. In the previous 4 point model, A and D really were the outliers, and B and C being bulk of the ratings. C has usually had a negative connotation to it, often considered as average performance. During the mid-

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Ajay Kumar (Summer: Tue, Thu)

year reviews this year, I had to review and rate my team and I was a bit apprehensive that B rating on the 3 point scale might be interpreted similarly as the C rating on the previous scale. Additionally I could consider other options such as compensation, role and responsibilities, business travel etc. When preparing for the performance reviews this year I tried to develop a deeper understanding of each team members interest and tried to align them with the available options. In fact, out of the 6 team members, I could only rate 2 as A and the rest were rated B. One of the strong performers who was rated B was provided with an opportunity to travel overseas to help the offshore team to develop better understanding of our operational process. After discussing the career path for another strong employee, we were able to change his role from an engineer to an analyst. These decisions helped in improving the morale of the team, and helped reinforce to the team that their performance will be rewarded one way or the other. By identifying each partys interests and aligning them with the available options I was able to create value for everyone involved. Circumstance(s) In a negotiation, one must know their own interests, but also knowing the other partys interest helps in value creation resulting in a win-win situation.

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Ajay Kumar (Summer: Tue, Thu)

Why guideline would be helpful? This guideline helps you understand the interests of the other party and whether they align with your interests. Eventually this helps in knowing whether there is ZOPA in a particular negotiation and whether or not an agreement is better than your BATNA. Limitations Determining interests of the other party might not always be straightforward. Depending on who your negotiating partner is, some of this information might be or not be readily available. Guessing other partys interests could be risky especially since, if based on incorrect assumptions, it might eventually impact the outcome negatively.

Guideline #3: Always reinforce legitimacy of an agreement in order to establish strong relationships.

Evidence My previous car was a few years old and I had to bring it in for repairs very often. Even though from outside the car looked pretty new, it had lot of mechanical problems. Since it was a German make, parts and service were quite expensive. During one of my visits to the dealership, I was told that the catalytic converter needed to be replaced for approx $2,000. At that point I decided to sell the car and look for another make/model that had better ownership cost. When asked the dealer, he was only willing to offer

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$2,000 to buy it from me. The Kelly blue book (KBB) value was $6,000; however I did understand that it needed ~$2,000 in repairs. Since the dealers price was outside my reservation and aspiration values, there was no ZOPA. Hence, I advertized the car on craigslist for $5,000 and within hours I started receiving responses. I decided to meet few people who seemed genuinely interested. One of the respondents, Joe, came to see the car and decided that he wanted to purchase right away. At that time I told Joe about the problem, and agreed to knock off $1,000 if he purchased the car on the same day. Joe responded by saying that he wanted full $2,000 discount to be able to fix the problem. I told him that I had already priced the car $1,000 below KBB price and by knocking of additional $1,000, he would get a fair price. After few times back and forth, we agreed on the final price of $3,500. Both of us were very please with the agreement and felt that it was fully legitimate. Circumstance(s) Legitimacy is a step prior to relationship in the 7 elements of negotiations. If both parties feel the sense of legitimacy, it will lead to a good relationship. Not all negotiations are distributive bargaining. After youre finished negotiating, both sides should feel a sense of legitimacy. You do not want the other party to go back having a feeling that they were taken advantage of.

Why guideline would be helpful? Reinforcing legitimacy ensures that both parties leave a negotiation feeling better about it. It also helps build a strong relationship.

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Ajay Kumar (Summer: Tue, Thu)

Limitations It is most difficult to establish legitimacy in a distributive bargaining situation which is zero sum game. This process is driven really hard by one party with the intent of making a deal close to the other partys reservation value or close to their own aspiration value.

Guideline #4: You should never automatically assume your position of power in a multiparty negotiation. The person with the least power with the right strategy and coalition building can have a great deal of influence on the final outcome.

Evidence The possibilities of coalitional-formation make a complex multi-party negotiation very interesting. In order to be successful one must build a relationship with the group and form alliances with some of the members within the group. What one brings to the table defines his or her position of power. The person with the most amount of power has the greatest influence. However, by means of communication, trust, open exchange of information and understanding each others interests, one can quickly establish a rapport with the group. This rapport is extremely useful in coalition forming even when someone doesnt necessarily have a lot of power. Thus by right attitude one can establish his or her position of power. For example, at my work, like any other environment, there are few key people who have more influence over decision making than other. When I joined my group as a manager, these few individuals, even though

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Ajay Kumar (Summer: Tue, Thu)

subordinate to me in terms of hierarchy, had a lot of influence due to various factors such as subject matter expertise, connections etc. Since they considered me an outsider, gaining their trust and respect seemed like a very difficult task. As a manager, it was very important for me to establish my position as a leader but I couldnt do so simply by demanding respect. Hence I had to work on gradually gaining their trust by being respectful, open to listening to their viewpoints and by providing open and clear communication. It took a while but the team eventually started seeing me as one of them. This helped me in forming coalitions with team members who were purely apprehensive about me as their new manager, versus those who wanted to be difficult. Circumstance(s) This guideline would be useful in multiparty negotiations where you do not bring a lot to the table in terms of power. Winning trust by understanding interests of others will help you form coalitions in these situations.

Why guideline would be helpful? In a multiparty negotiation, your position of power is not always in your control. Therefore, you must not get demoralized if you are not in a powerful position. With the right attitude you can establish yourself as a powerful player.

Limitations You need to have time and opportunity for winning the trust of others. These opportunities do not always exist. In some cases powerful parties can form a coalition without even listening to parties with lesser power.
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